Antifragility by Nassim Taleb – What it is and How to Apply it to Your BusinessReading Time: 4 minutes
What is the opposite of fragility? Most people would answer robustness, toughness, or something along the line. Nassim Taleb, author of numerous bestsellers, e.g. Fooled by Randomness and The Black Swan, has a different opinion on the matter. His answer to the question is – antifragility.
What is Antifragility by Nassim Taleb
Coined by Mr. Taleb in his book Antifragile: Things That Gain from Disorder, this term describes a certain state of a system, be it a living organism or a business. The difference between toughness and antifragility is can be explained like this:
- A robust system can withstand a considerable impact and stay the same
- For an antifragile system, high-impact shocks and events are potentially beneficial
Antifragility goes beyond toughness. Such a system does not merely survive a shock, but can even improve because of it.
Instances of Antifragility
According to the book, an example of an antifragile trading strategy would be one that can not only withstand a turbulent and capricious market but becomes even more appealing under these conditions. For another example, let’s look a weightlifting, where training muscles allows them to withstand heavy lifting AND grows their strength as the muscle fiber tears are repaired.
This is how Mr. Taleb starts the Antifragile book:
“Some things benefit from shocks; they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk and uncertainty. Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile. Let us call it antifragile. Antifragility is beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.”
How to Apply Antifragility to Life and Business
One can apply the antifragility methodology to a variety of fields: physics, molecular biology, risk analysis (Taleb’s specialty), transportation planning, Aerospace (NASA), engineering, computer science, etc.
The central theme of the book purports that one must learn to make their public and private lives (including political systems, finances, social policies, etc.) not only resistant to chaos and randomness, but really “antifragile.” An important part of this is positioning yourself for nonlinear events. This allows to take advantage of errors, stress, and change.
Nonlinear Events in the Antifragility Theory
What’s a nonlinear event, according to Nassim Taleb? It is asymmetrical by nature, as opposed to a linear one. For instance, a worker’s hourly wage is a fixed value, and with every extra hour they work, they get a fixed, symmetrical reward. In contrast, an entrepreneur’s “hourly wage” is nowhere near fixed, it’s asymmetrical. Today their project failed and they lost money, tomorrow they are lucky and earn thousands $.
Steps to Becoming Antifragile in Business
In Mr. Taleb’s opinion, “We have been fragilizing the economy, our health, political life, education, almost everything” by “suppressing randomness and volatility”. Instead, reaching the state of antifragility in business takes embracing the volatile nature of our existence and learning to benefit from it.
1. Start Often and Ship Often
In modern market reality, most of your projects will have marginal success, some will totally fail, and a few will turn out a blast. Considering this, the most rational business model would be to start and ship as many products as possible, to create your odds of winning big. Otherwise, if betting everything on a single project, you are essentially setting yourself up for failure.
2. Know What NOT to Do
An important part of becoming antifragile is limiting downside exposure. For businesses, it means to avoid:
- areas with high entry barrier
- areas with fierce competition
- go into debt
3. Spend as Little as Possible
The more you invest in a single project, the more you need it to be a big hit. Considering the 1st point of this list, you see how it’s a huge problem. On the contrary, bootstrapping everything you can helps reduce the downside risk per project, while still exposing it to unlimited upside potential.
4. Test Your Product ASAP
The sooner you validate your project, the faster you know the answer to the vital question: will this work? Because if it doesn’t, you want to know this BEFORE you sink a fortune on this idea. Then, you can decide – to scrap the product altogether, or perhaps it would be reasonable to press on and look for ways to fix it.
5. Facilitate Unlimited Upside
Remember what we said about nonlinearity? This is the stage to apply it. Aim for ideas that can win big, rather than those guaranteeing a tiny and steady return. Another hint is to concentrate on projects that require little to scale. This way, you ensure that you don’t spend too much before the project is validated, while leaving the door open for nonlinear growth in case of success.
6. Create More Options
By options, we mean your ability to switch projects, businesses, and even whole areas if needed. The more options are available to you, the higher the chance that you succeed in one sphere or another. Your optionality can be increased by three factors:
- Make lots of money (duh!)
- Create a network of useful contacts
- Acquire new skills
7. Join the Projects that Facilitate These Rules
Strive to take part in many entrepreneurial endeavors (from IT development and physical goods production to more edgy stuff, like cryptocurrencies), not concentrating on a single one and hoping that it will take off. This is the best way to become antifragile, increase your optionality, increase the upside potential, and limit the downside risk.
It must also be stressed that having a hand in multiple projects at once can be quite daunting and requires a fair level of self-organization. To aid with that, we recommend using professional planning tools, such as Roadmap Planner. It allows to keep all your plans and projects on the same page, meaning that you will always have the full picture of your endeavors, bird’s-eye view.
This article was contributed to KeepSolid by Robert Smith from the Altcoin Sidekick cryptocurrency blog.